The Etymologies of Capital, Capitalist, and Capitalism: A Brief Sketch

By Lambert Strether of Corrente.

In a recent — and very stimulating — discussion between Michael Hudson and Steve Keen, a question arose: When was the term “capitalism,” er, coined? This intrigued me, and being a glutton for punishment, I thought I’d look into “capital,” and “capitalist” as well.

I should caveat right away that, as far as possible, I’m looking at the emergence of the words in context (source, nation, date) with meanings as understood in normal commercial life. The post is in no sense systematic, it’s totally not an intellectual history, and it’s Anglo-Centric, since English is the language I speak, and English tools are the tools I have. The post only covers what Bourdieu would call economic capital (and not social or symbolic capital, even if understanding those two forms of capital has great potential for understanding why capitalism is so anti-fragile).

Here is the Indo-European root of “capital”, kaput (!):

(I love this stuff. From the root, branching out: “capital”, “caprice,” “cattle,” “caudillo,” “chef”….) Historically, “capital” comes first, followed by “capitalist,” and lastly by “capitalism,” and I will take the terms up in that order. First, a perspective that applies to all three from Stephen Stoll, “The History of ‘Capital’“:

So complete has capital become throughout the social order that it appears to have emerged from the natural order, and the behavior it instills seems to many people to be an expression of universal human motives and aspirations. As three historians observe, “One of the distinguishing features of a free-enterprise economy is that its coercion is veiled … Far from being natural, the cues for market participation are given through complicated social codes [social capital, symbolic capital]. Indeed, the illusion that compliance in the dominant economic system is voluntary is itself an amazing cultural artifact.” It might be true that the gentry did the same thing in 1650 that they did in 1250. They extracted value from people and environments. But they did it differently than anyone had before, through a discipline imposed by rents and wages, through social codes and cues that appeared to be independent of people. They aren’t. Perhaps the most radical idea we can have about capital, the single most subversive thing we can think about it, is that it begins as nothing more than a relationship between people. Like the meanings of words, relationships change.

Of all the insights of the people who coined “capitalism,” I think that is the most important, if not exactly mainstream.

Capital

My Oxford English Dictionary (OED), dates “capital” to M16, that is to the middle of the 16th Century CE:

Frederic Pryor, in Capitalism Reassessed, “Appendix 2-1: Etymology Of ‘Capitalism’” gives the word’s history after the Indo-Europeans but before the English glommed onto it, as we do (which is why English is such a wonderful language and there are so many volumes to the OED[1]):

[The word “capital”] comes from the Latin words capitalis, capitale, which in Western Europe in the Middle Ages designated, among other things, “property” and “wealth.” (Berger, 1986: pp. 17-18). In classical Latin, however, “property” was designated by a different word, namely caput. The Thesaurus Linguae Latinae (1906-12, vol. 3: 43-34) provides examples of this usage: for instance, around 30 B.C., Horace employed it to indicate “property” in his Satire 1 (Book 2, line 14). Several decades after Horace, Livy also employed the word with roughly the same meaning. A common derivation linking “capital” to “head of cattle” (hence wealth) appears to be incorrect.

(On “cattle,” the American Heritage Dictionary would appear to disagree. “Infinite are the arguments of mages” applies to a lot of the derivations here presented, and, I think, to etymology in general.) Franz Rainer, in “Word formation and word history: The case of CAPITALIST and CAPITALISM” adds a twist:

[B]y the time that the first derivative, capitalist, appeared, capital generally referred to the property, not necessarily only money, that a rich person owned. In double-entry bookkeeping, the term referred to the net worth owned by the merchant after taking away the liabilities from the assets.

(Rainer’s scholarship is a real pleasure to read, and if you have the time to sit with it, I recommend you make a cup of coffee and do so.) Sadly, Rainer doesn’t footnote when and where the double-entry bookkeeping usage appeared, but it would be pleasing if it were Italy, where double-entry bookkeeping (at least for the West) first propagated, and even more pleasing if it were one of the Italian city-states where, at least according to Giovanni Arrighi (The Long Twentieth Century) capitalism originated. Rank speculation! We turn now to a later addition to our stock of words, “capitalist.”

Capitalist

My OED dates “capitalist” to the late 18th Century:

It’s interesting that we have a word for the thing relation, “Capital,” and had to wait two centuries to have a word for the owner of the thing relation.

Here we turn again to Rainer, “Word Formation,” whose research is exhaustive and properly sourced:

[T]he noun Capitalist was indeed coined in the Netherlands (then: “United Provinces”) back in 1621 by tax authorities in order to designate a wealthy citizen who possessed 2,000 guilders or more… [For the] Dutch Capitalist was a complex concept, designating at the same time a wealthy person, mostly engaged in money-lending or investment activities, as well as a category of the tax authorities.

And:

The 17th century is called the “Golden Age” in Dutch historiography, because the United Provinces at that time were at the forefront of trade, military, science and art. This background, especially their eminent position in international finance, explains how a Dutch neologism could spread abroad and start an astounding international career. Already by the end of the 17th century, we find loan translations in German and French. German Capitalist (today written Kapitalist) appears as early as 1671 in a document on the financial system of the United Provinces, where, due to its novelty, it is glossed as ‘money-lender’ The German word, as far as I can see, had no influence on French.

“Capitalist” now hops to France, rather like a virus on an airplane, still in Rainer’s telling:

The few examples that we find in French until the middle of the 18th century…. refer to that same Dutch reality. In the second half of the 18th century, however, the noun capitaliste firmly established itself in French with a reference independent from the Dutch context. Here is a quote from the Dictionnaire domestique portatif (Paris: Vincent 1765), vol. 3, p. 505: “RENTIERS; ce terme est synonyme à capitaliste, c’est-à-dire, à celui qui fait valoir son argent, en le disposant suivant le cours de la place, & qui vit de ses rentes.”The diffusion of the term among a wider public was furthered by its adoption by the Physiocrats [Turgort, 1788], an economic school that began holding much sway at that time, in France and abroad.

(Sadly, “rentiers” is out of scope for this post.) Finally, “Capitalist” now crosses both the Atlantic and the Channel to the English-speaking peoples[2]:

Nowadays we strongly associate capitalism with the Anglo-Saxon world, but the truth is that Great Britain and the United States were the last among the big, developed nations to take up the word capitalist. In English, capitalist does not make its appearance before 1787, when the following example is attested in Madison’s [(!!!!)] writings… “In other Countries this dependence results in some from the relations between Landlords and Tenants in others both from that source and from the relations between wealthy capitalists and indigent labourers.” Four years later, the word is used in England by Edmund Burke…. There can be no doubt that French was the donor language for the English calque.

(A “calque” is “a word or phrase borrowed from another language by literal word-for-word or root-for-root translation” (English “hamburger” to French “hambourgeois”). And so to the final addition to our word hoard, “capitalism.”

Capitalism

My OED dates “capitalism” to the middle of the 19th Century:

So, from move from the relation, “capital,” to the person playing one of the roles in that relation, “capitalist,” and then to the system in which those players play those roles, “capitalism,” takes about three hundred years.

Here we have two different narratives that, so far as I can tell, do not intersect. First, Rainer:

[C]apitalist acquired the sense ‘entrepreneur’ after having crossed the Channel (and the Atlantic), a sense that migrated back to France from the 1830s onwards, where it has cohabitated with the original sense ever since. Capitaliste, in that way, became the antonym of ouvrier, travailleur (both ‘worker’) and prolétaire ‘proletarian’, just like capital ‘capital’ had become the antonym of travail ‘work’. This lexical opposition simply reflected an extra-linguistic phenomenon, namely the well-known social divide created by the Industrial Revolution. In the 1840s, French capitalisme was also attracted by this lexical field and thereby was converted into the standard designation of the new economic system characterized by the exploitation of workers in factories owned and often run by a small group of capitalists/entrepreneurs. Here are some of the first examples of this new sense, which are probably attributable to Louis Blanc: “Une lutte récemment engagée entre Lamartine et L. Blanc a donné naissance à un nouveau mot ; le capitalism. Ce n’est pas au capital, s’écrie ce dernier, que nous avons déclaré la guerre, mais au capitalisme ; c’est-à-dire, sans doute, aux capitalistes“

(Louis Blanc was a French utopian socialist.) Importantly, from its formation, “capitalism” was always explicitly oppositional both in nature and in conception:

[T]he new lexical opposition [of capitalism] with socialisme and communisme could be viewed either as a consequence of this conceptual change, or as its trigger. In fact, the relevant meaning of these two terms, namely an ‘economic system where the means of production pertains to the workers or to society as a whole’, called for a designation for the opposite concept of an economic system where the means of production was concentrated in the hands of a small group of wealthy individuals. Since this means of production was referred to technically as capital and the entrepreneurs had come to be called capitalistes, capitalisme was a natural choice. This reconstruction of the word’s origin also neatly explains why the word was used with negative connotations right from the beginning: it was launched by the opponents of capitalism, while capitalists themselves and circles close to them used to call the then prevailing economic system libéralisme (économie de marché ‘market economy’ is of much more recent vintage).

The second narrative comes from Michael Sonenscher, “Capitalism: The word and the thing.” Here again “capitalism” is oppositional, although framed by post-1789 French reactionaries, rather than utopian socialists:

[A] number of royalist publications that began to circulate before and after the French Revolution of July 1830 [used the word, inspired by a Royalist named Bonard]. Here, capitalism became a shorthand for a fusion of two related problems. Behind the political question of the type of constitution suitable for the new regime, there was also, they argued, a social question, which asked whether any or all of the constitutional arrangements established by the July Monarchy were compatible with the combination of the division of labour, public debt, and inequality that, they claimed, were the hallmarks of capitalisme. No simple constitutional adjustment, they argued, could erase the legacy of the French Revolution. Real closure would have to come from erasing the French Revolution itself.

Capitalism, in this setting, began as a French royalist and legitimist concept that was designed to expose the limitations and fragility of the Restoration settlement and July Monarchy. It also, more importantly, began as a real political problem since the original concept of capitalism was a palimpsest of many of the most morally and socially explosive issues to have arisen over the course of the eighteenth century and the French Revolution: from war and debt to constitutional crisis and social dissolution. Positioning the concept of capitalism in a context that, right from the start, was significantly more apocalyptic than that of an industrial revolution or an economic category helps to explain the urgency and intensity of efforts made to understand the nature of the thing itself.

Whether from the right or from the left, “capitalism” propagated rapidly until “legitimized” in Germany in 1902. Rainer once more:

A more interesting conceptual change occurred at the beginning of the 20th century. At that time, academic circles began using the term not only to refer to the contemporary economic system, what we now call industrial capitalism, but also to economic systems of past times that, in their opinion, presented sufficient similarities with the contemporary system to be called capitalism. Proto-capitalism was located in the Renaissance, in the Middle Ages, or even in Antiquity. This conceptual change, which was the result of conscious conceptual manipulation for scientific purposes, resulted in a more abstract concept of capitalism, freed from some of the more contingent aspects of 19th century industrial capitalism, as well as its negative overtones…. [T]he international success of this scientific sense was certainly due to the publication, of Werner Sombart’s monumental Der modern Kapitalismus [in 1902].

After 1902, of course, came 1917[3], after which “capitalism,” still oppositionally charged, exploded into the American media environment of that time. From Steven G. Marks, “The Word ‘Capitalism’: The Soviet Union’s Gift to America“:

As the press conveyed the earth-shattering events occurring in Russia they adopted the word “capitalism” en route. Nearly every New York Times article that mentioned it in the 1920s had to do with the Soviet Union and its rulers Lenin, Trotsky, and Stalin. Simple reporting on the USSR required adoption of the term, and editorializing necessitated defining it. The definitions varied according to the political orientation of the writers and publications. By 1919, the first Red Scare was in full fury, and conservatives in the US were denouncing Bolshevism as a ‘menace to Americanism.’

Fast forward to the present day:

[M]y purpose has been to call into question what we really know about capitalism by showing that at nearly every moment since the word came into use it was defined by way of comparison with the dreaded Soviet Frankenstein economy. As a result, American conceptions of capitalism have been, and still are, imbued with what Samuelson once called the economic ‘science fiction of the right as well as of the left and center.

Let me close by quoting Christine Lagarde, “Economic Inclusion and Financial Integrity—an Address to the Conference on Inclusive Capitalism,” in a speech before the International Monetary Fund:

Capitalism originates from the Latin “caput”, cattle heads, and refers to possessions. Capital is used in the 12th century and designates the use of funds. The term “capitalism” is only used for the first time in 1854 by an Englishman, the novelist William Thackeray—and he simply meant private ownership of money.

Holy moley. But I don’t have time to put on yellow waders. Perhaps, armed with this post, readers can pick apart LaGarde’s words….

Conclusion

I should really have a terrific peroration here, but since the goal of the post was purely to explain, perhaps not. Once again, the moral:

So, from move from the relation, “capital,” to the person playing one of the roles in that relation, “capitalist,” and then to the system in which those players play those roles, “capitalism,” takes about three hundred years.

That’s a long time to rectify the names. Are we doing any better today?

NOTES

[1] Sadly, my printed Shorter OED, the one with the magnifying glass, which I got as a signing bonus from the Book of the Month Club, is gone where the woodbine twineth. All I have now is an app!

[2] I am guessing many usage examples could be gleaned from the “Positive Good” theorists in what would become the Confederate States. From George Fitzhugh, Cannibals All, 1857:

The capitalists, in free society, live in ten times the luxury and show that Southern masters do, because the slaves to capital work harder and cost less, than negro slaves.

[3] Here is an interesting discussion on the issue of whether The Bearded One used the word “capitalism.” From his letters, yes he did.